NEW YORK (TheStreet) -- If history is any guide, Vladimir Putin's iron grip on Russia could be threatened by the lowest oil prices in a decade. It also partly explains his increasingly belligerent stance toward the West.
Crude oil and natural gas prices have been central to Russian prosperity for decades. As they fluctuated, so did the country's fortunes. And they have led Russia to outward aggression before and could again.
For every dollar off the price of a barrel of oil, the Russian government loses $1.7 billion in annual revenue. The Russian government accrues about half of its revenue from the oil and gas economy. If prices remain at their current level, Moscow would bring in almost $50 billion less revenue in 2015. Subtract another $10 billion to $15 billion due to the renegotiation of gas contracts and that's a major hit to a revenue budget of around $400 billion, and a government that is depending on $100-a-barrel oil to meet its 2015 budget deficit goals.
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In the 1970s, the explosion of crude oil and natural gas prices -- linked in Russian export contracts -- brought relative wealth to Soviet Union. That ushered in a brief "golden" season during the last years of the Brezhnev regime. The collapse of oil in 1986 undermined the stability of Gorbachev's government, spreading discontent.
The low prices prevailing during the 1990s kept Boris Yeltsin in a state of permanent instability, forcing his government into desperate moves like the uncontrolled privatization -- tantamount to a fire sale -- of state assets. That persisted until the 1998 collapse, when Russia risked a financial default.
Oil prices rose again after the appointment in August 1999 of a relatively unknown political figure as the new prime minister, a move interpreted by many as just another Yeltsin experiment doomed to failure. That prime minister was Vladimir Putin, who was eventually elected President of Russia in 2000, which kicked off a decade in which oil prices reached historic highs. Oil windfall profits allowed Putin to build up an undeniable domestic consensus, restoring political stability and re-launching Russia on the international scene.
Now, however, the combination of the Ukraine crisis, international sanctions and falling oil prices open up new, worrisome scenarios for Putin, Russia and the world order. International sanctions that have hurt the Russian economy have further added to the pressure on Putin.
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